FOR IMMEDIATE RELEASE
2009-122

Washington, D.C., May 26, 2009 — The Securities and Exchange Commission has obtained an emergency court order to freeze the assets of Texas A&M finance professor Robert D. Watson, who resigned from that position last month, as well as Houston lawyer and certified public accountant Daniel J. Petroski and two firms. They are charged with defrauding U.S. investors by using forged bank records to make it appear they were earning spectacular returns in foreign exchange trading.

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The SEC’s complaint, filed in federal court in Houston, alleges that Watson and Petroski raised more than $19 million from investors and claimed they would earn profits through “Alpha One,” a foreign-currency trading software program purportedly owned by their firm PrivateFX Global One Ltd. They claimed they would employ the services of 36 Holdings Ltd., a so-called “deal clearing company” owned and controlled by Watson. The SEC alleges that Watson and Petroski misrepresented to investors that it had millions of dollars in bank accounts in the U.S. and Switzerland and that their foreign exchange trading business had achieved an annual return of more than 23 percent since its inception and has never had a losing month. The SEC alleges that the defendants’ historical performance claims are not supported by valid financial records.

“As we allege in our complaint, these defendants used modern technology to create professional-looking, bogus documents that supported their extraordinary claims,” said Rose Romero, Director of the SEC’s Fort Worth Regional Office.

Pursuant to the SEC’s motions for emergency relief, U.S. District Judge Sim Lake entered a temporary restraining order, froze the defendants’ assets and appointed Thomas L. Taylor III of Houston as a receiver to marshal assets belonging to the defendants and affiliated entities. The receiver has established a Web site to provide information to investors (www.privatefxreceivership.com).

The SEC’s complaint alleges that in response to Commission investigative subpoenas, Watson and Petroski produced phony records purporting to show that 36 Holdings held an account at Deutsche Bank, where it earned more than $2 million for Global One in 2009 by trading foreign currencies. In fact, 36 Holdings did not even have an account at Deutsche Bank. The SEC’s complaint also alleges that the defendants provided the Commission staff with phony bank statements from a Swiss bank and falsely claimed that 36 Holdings had almost $70 million on deposit there, including $11 million of Global One funds.

The SEC’s complaint charges, among other things, that the defendants violated the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. In addition to emergency and interim relief that has been obtained, the SEC seeks a preliminary injunction and a final judgment permanently enjoining the defendants from future violations of the relevant provisions of the federal securities laws and ordering them to pay financial penalties and disgorgement of ill-gotten gains with prejudgment interest.

The Commission appreciates the assistance of the Commodity Futures Trading Commission, which simultaneously filed a related emergency action against all of the defendants. The Commission also acknowledges the assistance of Panamaís National Securities Commission, the Swiss Financial Market Supervisory Authority, the United Kingdom Financial Services Authority, and the Texas State Securities Board. The SECís investigation is continuing.